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Size really does matter!

Having listened to many politicians over the past few months paying lip service to the need to help SME’s create much needed employment in the Irish Economy and having kept a watchful eye on the E Tenders website for suitable tenders, I have come to the conclusion that I am wasting my time even bothering about the possibility of getting any business from the public sector.

A couple of months ago I wrote about a tender for Data Entry for a Government Body that was specifically designed so that the work would be conducted outside of Ireland. This was done by the insertion of a clause which placed an upper limit on the price that could be submitted by tender – any tender received which quoted a price over the limit would be excluded. When I carried out some basic costings using the minimum Irish wage rate and industry standards for data entry the base cost, without any overhead or mark-up exceeded the limit imposed by the tender, so a business like my own, using Irish Staff was immediately excluded from the tendering process.

The usual response

Any Irish company submitting a tender would have to have the actual work carried out in one of the low cost economies most likely the Philippines or India. Not one iota of a contribution from this work would be made to the coffers of the state and not one Irish job would be created or maintained and this at a time when we have 400K people on the live register. When I brought this to the attention of our politicians, I got the usual response, highly indignant of the situation, need to make changes etc. etc.

This morning I downloaded the documentation for a tender for the provision of contact management services to the Commission of the Energy Regulator. This is something that is right up our street as we provide this type of service to a number of large multi nationals and Irish companies already and we excel at it , constantly exceeding customer SLA’s and expectations.

As a relatively new business only trading for 4 years we are anxious at this stage to break into the public sector area where we believe we can replicate the service levels we already deliver to our existing customers. We meet all of the criteria in relation to equipment, software expertise and experience; however there is a restrictive clause in the tender which excludes companies that have a turnover of less than €500k over the past 3 years. Now I am of the school of thought that believes that Turnover is for Vanity and Profit is for Sanity.

Profit and cashflow

The important financial measures for any business in my humble opinion are Profit and Cash Flow and strength of balance sheet. My staff and I have spent the last 4 years building up our business into a profitable (albeit small) business. We have an excellent cash flow, little creditors, are fully tax compliant but we don’t have a turnover of €500k for the last three years we were close to it but not close enough. So we find ourselves discriminated against because of our size.

Currently we supply similar services to a number of multinational companies operating in the White Goods and Pharmaceutical Industries, these companies are extremely discerning about their customer service levels and their brands , yet they entrust us with handling all of their calls in Ireland, why? Not because of our turnover or our vanity , but because we deliver quality service.

So next time someone tells you that size doesn’t matter – Don’t believe them it does when you are a state organ(isation).

3 Responses to Size really does matter!

Well said and very true. I was a Property Cleaning, Maintenance and repairs contractor for over 12 years, with full and part time employees and a few vans on the road back in the Tiger days and my turn over couldn’t reach the turn over levels required to allow us to bid for eTender contracts, we could well have carried out the contracts up for bid but were penalized for not being big enough. If we had some of those contracts we would have grown our business but alas someone else got them and the recession killed my business in the end!
Turn over is Vanity and net profit is Sanity, I just work on my own now, no employees, no Government contracts and no headaches!

So frustrating yet common-place in Ireland. There is little or no joined-up thinking when it comes to actually looking at what people are doing to get by. There are start-ups or relatively new businesses in all sorts of areas but some qualify for grants due to the sector whereas others don’t even though many of the latter have more chance of long term success. My personal bug-bear is “innovation vouchers” – you can apply if you’re a limited company but not if you’re a sole trader and the very voucher might just be the help you need to make the change or even employ? Unfortunately however I don’t think this will ever change as long as career public servants remain in the positions of authority as they’ve never had to worry about paying the rent or even whether they’ve got work tomorrow – real business people need to be taken on board to help build the future but regrettably I don’t see this happening anytime soon.

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